January 2015

2014 Year in Review

IVA Worldwide Fund
Class

Ticker

CUSIP

A
C
I

IVWAX
IVWCX
IVWIX

45070A107
45070A503
45070A206

IVA International Fund

Class

Ticker

CUSIP

A
C

IVIOX
IVICX

45070A305
45070A602

IVIQX

45070A404

The performance of global equity markets was dispersed this year with U.S. equities performing
well along with indices in China, while other major International markets suffered, especially
with their performance measured in U.S. dollars. The Federal Reserve ended its quantitative
easing program in October 2014, and in the latter half of 2014 we saw the U.S. dollar strengthen
significantly against all major currencies while the price of crude oil fell drastically, sliding to
a five year low. Broadly speaking, the global economic recovery is being led by the U.S. while
economic conditions in Japan, Europe, and China have weakened. Despite Japan ramping up
their quantitative easing program, it is struggling to hit its 2% inflation target and it slipped
into a recession in November after two quarters of negative gross domestic product (GDP)
growth. Europe continues to struggle with low inflation and slowing growth, thus the European
Central Bank seems willing to expand its balance sheet in 2015 in an attempt to boost lending
and avoid deflation. And growth in China continues to slow.
It wasnt a smooth ride for global equity markets as they exhibited quite a bit of volatility this
year: from late January to early February 2014, from late July to early August 2014, from the
beginning of September to mid-October 2014, and in the first half of December 2014. We
capitalized on the market volatility this year by finding some new opportunities and adding to
existing positions when their share price fell. Over the year, we built meaningful positions in
Samsung Electronics Co., Ltd. (technology, South Korea) and News Corporation (consumer
discretionary, U.S.), and also added positions in Henderson Land Development Co. Ltd.
(financials, Hong Kong) and Altran Technologies SA (technology, France) in both Funds. Our
equity exposure totaled 52.2% in Worldwide and 57.5% in International at year-end.

Investment Risks
There are risks associated with
investing in funds that invest in
securities of foreign countries,
such as erratic market conditions,
economic and political instability
and fluctuations in currency
exchange rates. Value-based
investments are subject to the risk
that the broad market may not
recognize their intrinsic value.

www.ivafunds.com

The IVA Worldwide Fund Class A (NAV) returned 3.20% for the year, marginally
underperforming its benchmark, the MSCI All Country World Index with a return of 4.16%.
Our solid absolute return this year was largely due to good stock picking, especially in Japan, a
smaller allocation to energy stocks, and avoiding some of the benchmarks losers like stocks in
materials, Russia, the United Kingdom, and Germany. Although our high cash position and
fixed income holdings muted our return, our equities averaged a gain of 6.6% versus those in
the MSCI All Country World Index* returning 4.2%. Our U.S. equities averaged a gain of
13.3% over the year and added 3.3% to our return. A number of our stocks in Japan performed
well this year, averaging a gain of 8.8% versus those in the Index which were down -4.1%, and
added 0.7% to our return. Conversely, stocks in South Korea detracted -0.3% from our return.
Stock picking in Europe (ex-UK) added to relative results as our stocks there only detracted
-0.2% from our return versus those in the Index detracting 1.0%. In early July we trimmed
some of our energy stocks, which helped mitigate losses later in the year. Our energy stocks only
detracted -0.2% from our return year-to-date while those in the Index detracted -1.1%.
The IVA Worldwide Funds top five individual contributors to return for 2014:
Security

Sector

Country

Berkshire Hathaway Inc., Class A and Class B

Holding Company

U.S.

Astellas Pharma Inc.

Health Care

Japan

DeVry Education Group Inc.

Consumer Discretionary

U.S.

Oracle Corporation

Technology

U.S.

Devon Energy Corporation

Energy

U.S.
continued to page two

The IVA Worldwide Funds top five individual detractors from return for 2014:
Security

Sector

Country

News Corporation Class A and Class B

Consumer Discretionary

U.S.

Laredo Petroleum, Inc.

Energy

U.S.

Genting Malaysia Bhd

Consumer Discretionary

Malaysia

Rosetta Resources Inc.

Energy

U.S.

Wendel 4.375%; 4.875%; 6.75%

Holding Company

France

The IVA International Fund Class A (NAV) returned 1.15%, outperforming its benchmark,
the MSCI All Country World (ex-U.S.) Index with a return of -3.87%. Our positive return this
year was largely due to good stock picking, especially in Japan, avoiding some of the benchmarks
losers like stocks in energy, materials, the United Kingdom, Russia, and Germany, and our
cash exposure, which helped to protect the portfolio on the downside. Our equities averaged a
gain of 1.0% versus those in the MSCI All Country World (ex-U.S.) Index* returning -3.8%.
Performance was fueled by our stocks in Japan, which averaged a gain of 7.3% versus those in
the benchmark which were down -4.1%, and added 1.3% to our return. We also benefited from
good stock picking in Hong Kong as our equities averaged a return of 10.1% versus the Index
at 2.4% and contributed 0.3% to our return. Although France detracted -0.5% from our return
due to poor performance from a few industrials stocks, our stock picking in Europe (ex-UK)
added to relative results with our stocks only detracting -0.5% from our return versus those in
the Index detracting -1.9%. South Korea also detracted -0.4% from our return.
The IVA International Funds top five individual contributors to return for 2014:
Security

Sector

Country

Astellas Pharma Inc.

Health Care

Japan

Miura Co., Ltd.

Industrials

Japan

Clear Media Limited

Consumer Discretionary

China

Fimalac SA

Financials

France

San-A Co., Ltd.

Consumer Staples

Japan

The IVA International Funds top five individual detractors from return for 2014:

www.ivafunds.com

Security

Sector

Country

News Corporation Class A and Class B

Consumer Discretionary

U.S.

Genting Malaysia Bhd

Consumer Discretionary

Malaysia

Springland International (Holding) Co. Ltd.

Consumer Discretionary

China

Yahoo Japan Corporation

Technology

Japan

E-Mart Co., Ltd.

Consumer Staples

South Korea

A number of our international stocks and bonds were hurt by weakness in their local currency,
especially in Japan and France, however, both Funds benefited from being partially hedged,
particularly against the yen and euro, as our currency hedges added back 1.5% to the Worldwide
Fund return and 2.8% to the International Fund return this year. We increased our hedges
against the euro and yen this year. In the Worldwide Fund, our hedge against the euro increased
to 61.6% from 39.2%, and our hedge against the yen rose to 60.4% from 50.0%. In the
International Fund, our hedge against the euro increased to 56.5% from 29.2%, and our hedge
against the yen rose to 70.5% from 60.0%.
Our corporate bonds represented 5.0% of the Worldwide Fund and 5.6% of the International
Fund at year-end. A number of our bonds were called away this year as most of our exposure
is remnants of our investments from 2008/2009. Our corporate bonds averaged a return of
-3.5% and detracted -0.2% from the Worldwide Fund return. In the International Fund, they
averaged a return of -6.8% and detracted -0.4% from return.
We trimmed our sovereign bond exposure this year in both Funds as we are concerned about
a possible hard landing in China and the effect that might have on Asian currencies. We
reduced our exposure to the Singapore dollar bonds and eliminated the Hong Kong dollar
bond. In the Worldwide Fund, our exposure fell to 3.3% at year-end and in the International
Fund, our exposure decreased to 4.9% at year-end. Our sovereign bonds, mostly of Singapore,
detracted -0.2% from both Funds return this year as they were impacted by the strength of
the U.S. dollar.
Since inception of the Funds, gold bullion has been an important part of our portfolios that
we view as a hedge against extreme outcomes, inflation or deflation. Over the year, the price
of gold declined almost 2%, detracting -0.04% from the Worldwide Fund return and -0.1%
from the International Fund return. We remain comfortable with our exposure to gold, 3.4%
in Worldwide and 3.9% in International as of December 31, 2014, and added to it this year
when the price of gold fell below $1,200 an ounce.
Many asset classes and securities have seen their valuations go up significantly over the past
few years driven in part by low rates in developed countries, quantitative easing, and high
corporate profit margins. It remains a struggle for us to find genuine bargains, i.e. stocks
offering a meaningful discount to our estimate of its intrinsic value. Thus our cash exposure
remains 35.8% in the Worldwide Fund and 27.6% in the International Fund at year-end.
However, cash can be a powerful tool: it acts as a buffer when markets correct and it provides
the ammunition to buy future bargains.
Even though we view many stocks today as fully valued, we believe there are stock picking
opportunities for us to uncover. The more volatile markets are, the better we, as active managers,
should do. As Charles de Vaulx says, We are not market forecasters at IVA, not only because
one cannot forecast but more importantly because there is no need for it, the market is here
to serve us. What matters to us most at IVA is: valuation, understanding businesses, and
recognizing the risks. We will continue to focus on delivering absolute returns through good
stock picking, avoiding the losers, and always insisting on a margin of safety. With over six years
since inception, the Funds continue to build solid track records, and we thank you for your
continued confidence and support.
*The benchmark equity return excludes gold mining stocks

continued to page four

www.ivafunds.com

Performance Information
(as of December 31, 2014)
Class

1 Year

5 Years*

Since
Inception*

IVA Worldwide Fund Class A (NAV)

3.20%

8.08%

10.49%

IVA Worldwide Fund Class A (w/ 5% sales charge)

-1.97%

6.98%

9.59%

MSCI All Country World Index (Net)

4.16%

9.17%

8.03%

IVA International Fund Class A (NAV)

1.15%

8.03%

9.85%

IVA International Fund Class A (w/ 5% sales charge)

-3.92%

6.92%

8.96%

MSCI All Country World Index (Ex-US)(Net)

-3.87%

4.43%

5.09%

*Annualized
Past performance does not guarantee future results. The performance data quoted represents past
performance and current results may be lower or higher. Returns are shown net of fees and expenses and
assume reinvestment of dividends and other income. The investment return and principal value will
fluctuate so that an investors shares, when redeemed may be worth more or less than the original cost.
To obtain performance information current to the most recent month-end please call 1-866-941-4482.
Maximum sales charge for the A shares is 5.00%. The expense ratios for the funds are as follows: IVA
Worldwide Fund 1.27% (Class A); IVA International Fund 1.26% (Class A). The inception date of
both funds is October 1, 2008.
As of December 31, 2014, the IVA Worldwide Funds top 10 holdings were: Berkshire Hathaway,
Inc. Class A, Class B (3.6%); Wendel 4.375%, 4.875%, 6.75% (3.5%); Gold bullion (3.4%);
Astellas Pharma, Inc. (3.3%); SIGB (Singapore Government) 2.375%, 2.875%, 3.75% (3.2%);
Nestle SA (3.2%); News Corporation Class A, Class B (2.4%); Cimarex Energy Co. (2.2%);
Oracle Corp. (2.0%); DeVry Education Group, Inc. (1.8%). As of December 31, 2014, the IVA
International Funds top 10 holdings were: SIGB (Singapore Government) 2.375%, 2.875%,
3.75% (4.7%); Gold bullion (3.9%); Nestle SA (3.6%); Astellas Pharma, Inc. (3.3%); Wendel
4.375%, 4.875%, 6.75% (3.0%); News Corporation Class A, Class B (2.8%); Genting Malaysia
Berhad (2.1%); Samsung Electronics Co., Ltd. (2.1%); Hongkong & Shanghai Hotels Ltd. (1.9%);
Toho Co., Ltd. (1.8%).
MSCI All Country World Index (Net) is an unmanaged index comprised of 44 country indices
comprising 23 developed and 21 emerging market country indices and is calculated with dividends
reinvested after deduction of withholding tax. The Index is a trademark of Morgan Stanley Capital
International and is not available for direct investment.
MSCI All Country World Index (ex U.S.) (Net) is an unmanaged index consisting of 43 country
indices comprising 22 developed and 21 emerging market country indices and is calculated with
dividends reinvested after deduction of withholding tax. The Index is a trademark of Morgan
Stanley Capital International and is not available for direct investment.

International Value Advisers, LLC

717 Fifth Avenue, 10th Floor
New York, NY 10022
877.874.2999

The views expressed in this document reflect those of the portfolio manager(s) only through the end of
the period as stated on the cover and do not necessarily represent the views of IVA or any other person
in the IVA organization. Any such views are subject to change at any time based upon market or other
conditions and IVA disclaims any responsibility to update such views. These views may not be relied on
as investment advice and, because investment decisions for an IVA fund are based on numerous factors,
may not be relied on as an indication of trading intent on behalf of any IVA fund. The securities
mentioned are not necessarily holdings invested in by the portfolio manager(s) or IVA. References to
specific company securities should not be construed as recommendations or investment advice.
An investor should read and consider the funds investment objectives, risks, charges and
expenses carefully before investing. This and other important information are detailed in
our prospectus and summary prospectus, which can be obtained by calling 1-866-941-4482
or visiting www.ivafunds.com. The IVA Funds are offered by IVA Funds Distributors, LLC.
The IVA Funds are closed to new investors.

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